AI Bulls Take The Lead, Sending S&P 500 to All-Time High

Carol Massar (0:02)

Bloomberg Audio Studios Podcast.

SPEAKER_2 (0:06)

This is Bloomberg Businessweek Daily. Reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily Podcast with Carol Massar and Tim Stenovec.

Carol Massar (0:30)

Carol Massar, along with Jess Menton. A little bit of a party in here on this Tuesday. Hey, we're just a week ahead of earnings season. We've got the S&P headed toward its first record close since August. We've got a rally in AI shares going on, and that's brewing sentiment. NVIDIA's market cap approaching six trillion. AMD's Lisa Su predicting very high chip demand. Over the next few years for those listening on radio, registered quotation marks very high.

And 10-year yields falling from the highest since 2 So everything is awesome.

Tim Stenovec (1:03)

Yeah, it appears that way, especially after a gangbusters first half for corporate earnings growth for the S&P 500 I mean, outside of COVID and the great financial crisis, this is based on Bloomberg Intelligence data, but that's some of the best we've seen in decades, and especially at this point in the economic cycle. Who better to bring in?

Sastry Durvasula (1:19)

I know, Eric Weiner.

Carol Massar (1:20)

I'm curious about the conversations between you two. He's Senior Editor for Equities at Bloomberg News. He's in our Bloomberg Interactive Broker Studio.

Tim Stenovec (1:27)

He sits right behind me.

Carol Massar (1:28)

Oh my God. So, do you guys turn around and you're talking, and you're like, everything's great. What could go wrong?

Eric Weiner (1:34)

Well, no.

Not that. But today is one of those days where that's the vibe.

Carol Massar (1:43)

Yesterday was too. There was a little bit of American exceptionalism.

Eric Weiner (1:47)

Yeah.

Well, that's actually a really great point. When there are problems overseas, so you start seeing like France and bonds showing up on the front pages of newspapers, people just gravitate right back to US equities because that's where things are. You mentioned NVIDIA, and NVIDIA is fascinating. They were not a great stock in the first half of the year, and now they are leading the market higher.

If you look at, we pulled up some numbers. If you look at from the July 29th bottom on the S&P, there are about seven stocks that have really driven it. It's NVIDIA, Microsoft, Meta, Amazon, and then the chip makers, AMD, and Micron. NVIDIA is way ahead, and the reason is an Apple, which had really been driving things in the beginning, fell apart. And the reason for all this is Apple doesn't play on AI. Like they really aren't an AI play. So when the story was, I don't know about all this spending, everybody piled into Apple. Once it was back to the spending, then you had like some people taking flyers on smaller chip makers, but NVIDIA is still the closest thing to a sure thing that you have an AI. So like if you're doing a safety spending bet, NVIDIA is your guy.

Carol Massar (3:15)

I feel like as companies, nobody wants to piss, like tick off NVIDIA. Like, wait a minute, they want to keep that business relationship until they kind of know, because they want to make sure they have access to chips.

Tim Stenovec (3:24)

Well, we had Bloomberg opinion columnist.

Sastry Durvasula (3:27)

Tick off, tick off.

Tim Stenovec (3:29)

We had Bloomberg opinion columnist John Authors and earlier talking about the concerns about narrow breadth. And you and I have done so many of these stories where we've pulled data, and especially if you think back to 2023, 2024, even though there was a narrow breadth, it was led in this bull market, which actually the fourth anniversary is next Monday, the closing low October 12th. But nonetheless, people missed out on continued gains despite narrow breadth. So at what point is the inflection point to where the narrow breadth actually becomes a concern versus you could still miss out with stocks hovering around records?

Eric Weiner (3:57)

Well, you're waiting really. So this is the technology thing, right? So you were talking about earnings being strong. You can't step out right now. If you're a portfolio manager and you're thinking, okay, well, you know, things could blow up in three, four months. You still have three, four months of gains to lock in. So you can't walk away from that. But what you can do is kind of play with it. So like if you look at the last month, everything is down except tech, big tech and telecom.

Everything like all the interest rate sensitive stuff, real estate, utilities, banks, small caps, just doing poorly and that you just get this tighter and tighter, tighter ball. However, if you put your money in the S&P 500 fund, you don't care where those gains are exactly coming from. You just want the index to go higher. So yay for today.